Microsoft Missed the Key Nokia Piece

I know there’s already been a lot said about the Microsoft deal for Nokia, but I think that the deal may have some angles that still need more exploring!  That includes the “NSN dimension” of the deal, of course.

The biggest implication of the Microsoft/Nokia deal is that it doubles down on smartphones for Microsoft.  With the exception of a few die-hards, I doubt many think that Microsoft has a winning smartphone strategy at this point.  The challenge with the “Windows” model for the phone market is that it depends on a host of willing device partners, which has been hard for Microsoft to come up with in both the phone and tablet spaces.  By getting into the phone business directly, Microsoft controls the whole ecosystem.  Yes, it’s going to discourage anyone else from providing Windows phones, but it won’t prevent it.

The reason this is big isn’t that it makes Microsoft a phone vendor, it’s that it commits Microsoft to being one and thus puts a lot of company prestige and money behind what is very possibly a lost battle.  If you look at the Apple iPhone launch and its effect on Apple’s stock, it’s pretty obvious that the market recognizes that smartphones are becoming commodity items.  Even the market leader is now resorting to launching new models based on pretty colors, after all.  Can Microsoft, whose reportedly limited ability to be innovative and cool was the big factor in losing the phone space in the first place, now succeed when Apple could not?  I doubt it, but if they don’t then do they try to come up with new and different colors?  Heliotrope, burnt sienna, or umber, perhaps?  Bet there’s a run on art supply stores in Redmond already.

So why is this big?  It’s because Microsoft didn’t buy NSN.  In my view, the smartest thing the company could have done was to pick up NSN and not the phones, frankly.  That would have signaled that Microsoft was aiming to be a player in point-of-activity empowerment, the fusion of mobility, the cloud, and appliances that I’ve been talking about for some time.  Microsoft might have leapfrogged their competition had they picked up NSN, and even rehabilitated their decision to buy the darn phones by providing themselves a credible direction for differentiation.  The future of appliances doesn’t lie in finding new colors for phones or creating wearable tech, it lies in creating an experience ecosystem built not around devices but around the cloud.  NSN’s position with 4G and IMS could have been added to Microsoft’s own cloud to create the centerpiece of this whole point-of-activity thing.  Without NSN’s tools, Microsoft is still at the end of the day the same company it was before…which isn’t enough unless Microsoft leadership can truly transform their own thinking.  And no, Elop isn’t going to do that.

Which leaves us with the question of what happens to NSN.  Once the small piece of the Nokia tech pie, NSN is now arguably the flagship element and certainly the only place where there’s a major hope of growth.  The question is whether NSN, which had been focused on cutting back and cutting costs and cutting staff, can now focus on actually doing something revolutionary in a market that’s doomed to commoditization if somebody doesn’t figure out how to make features valuable again.  Mobile is the bastion of communications standards, and the inertia of the standards and the standards process has made it exceptionally difficult for anyone to drive real change in the space.  Can NSN now break out of that cycle?  Remember that the company wasn’t noted for aggressive marketing in the past.

The whole notion of “liquid” could encapsulate the NSN/Nokia challenge.  The idea is good in that it expresses the need for a fluidity of resources in an age where user demands for empowerment could mean as little as dialing a call or as much as researching a multi-dimensional social/location decision based on a dozen different factors and vectors.  The problem is that it’s easy to get the notion of “fluid” trapped in the network, particularly if that’s where you’ve been focusing it all along.  You need a fluid IT model for the future of mobile devices, not just a fluid networking model.  Can NSN provide that, or even conceptualize it?  It’s really hard to say at this point because NSN is still recovering from a change of ownership following a series of downsizings.  They may have cut the very people they needed.  But they may now, as the senior partner of Nokia alone, have some latitude in getting the right thing done.

SDN is an area where the media suggests Nokia may have an opportunity, but NSN hasn’t been a player in network-level technology for a decade, so there’s a question of just what NSN could apply SDN technology to.  Do they climb up the SDN stack, so to speak, and develop some smart “northbound applications” to OpenFlow controllers?  Do they build on an NFV-modeled vision of cloud/network symbiosis?  The problem with either of these approaches is that Nokia has nothing firm to anchor them to in equipment terms.  Most operators expect that there will be either an “open” strategy north of OpenFlow, or very vendor-specific vertically integrated strategies.  You can’t make money on the former and if you don’t have a complete network product suite you can’t make it on the latter either.

Microsoft, ironically, is in a better position to build those northern-facing apps than NSN or Nokia is.  Because they have the software credentials and a cloud framework in place, they could easily frame an architecture for software control of networking.  That gets me back to the point that maybe they needed to buy NSN too.  Think of the potential of that deal for SDN and NFV and you might agree.

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